Arthur S. Gabinet

General Counsel

agabinet@ofiglobal.com

September 24, 2015

Submitted Electronically and via Overnight Mail

Mr. Timothy D. Hauser

Deputy Assistant Secretary for Program Operations

Employee Benefits Security Administration

U.S. Department of Labor

200 Constitution Avenue, NW

Room N-5677

Washington, DC 20210

Re: Definition of the Term “Fiduciary”; Conflict of Interest Rule –

Retirement Investment Advice

RIN 1210-AB32

Dear Mr. Hauser:

Thank you for meeting with OppenheimerFunds1 on September 15, 2015 to discuss our 

comments and issues of concern under the U.S. Department of Labor’s (“DOL” or the 

“Department”) proposed rule addressing the Definition of the Term “Fiduciary”; Conflict of 

Interest Rule—Retirement Investment Advice, 75 Fed. Reg. 21928 (Apr. 20, 2015) (“Proposed 

Rule”). We are writing to provide further explanation and recommendations regarding two key 

issues that we discussed during our conference with you.

1. Making recommendations to a trained financial professional should not itself be 

fiduciary activity and should be addressed as a carve-out from fiduciary status.

As we discussed, OppenheimerFunds manufactures and markets a full range of actively managed 

investment funds as well as a range of retirement plan products and services for self-employed 

individuals and small businesses, including 401(k), profit-sharing and other types of plans and an 

IRA product. Almost exclusively, OppenheimerFunds sells these funds and products to and 

1 OFI Global Asset Management, Inc., a direct, wholly owned subsidiary of OppenheimerFunds, Inc. (“OFI”), is a 

registered investment adviser, providing investment management and transfer agent services to nearly 100 registered 

investment companies. OFI has been in the investment advisory business since 1960, and with its subsidiaries, has 

more than $235 billion in assets under management.

 
through sophisticated financial intermediaries, who in turn market products and services from 

multiple providers to ERISA plans and IRAs. We do not sell our products directly to ERISA 

plans or IRAs. 

In most cases, OppenheimerFunds markets to a financial professional who is a non-fiduciary to 

ERISA plans or IRAs, or who would be a fiduciary adviser under the new rule. However, in 

some cases the financial professional may be serving as a discretionary fiduciary for a plan as an 

ERISA section 3(38) investment manager or under a delegation of fiduciary responsibility from 

the plan’s named fiduciary. 

We believe that recommendations made to trained financial professionals should not be subject 

to ERISA fiduciary requirements, regardless of that professional’s status with respect to any 

ERISA plan (adviser or discretionary fiduciary). Financial professionals are well aware that 

OppenheimerFunds is a wholesaler engaged in selling activity, and not providing unbiased 

investment advice. These financial professionals are fully capable of, and know they are 

responsible for, making their own independent expert investment judgment. Accordingly, we 

ask DOL to adopt the following carve-out language in the final rule:

(b)(7) Advice to financial professional acting as plan fiduciary. The person provides 

advice to a plan fiduciary that is any one of the following entities: (1) a registered 

investment adviser under the Investment Advisers Act of 1940 or under the laws of a 

State in which it maintains its principal office and place of business, (2) a person 

registered as a broker or dealer under the Securities Exchange Act of 1934, or (3) an 

employee, agent, or registered representative of such a person who satisfies the 

requirements of applicable securities laws. For this purpose, a “registered representative” 

of another entity means a person described in section 3(a)(18) of the Securities Exchange 

Act of 1934 (substituting the entity for the broker or dealer referred to in such section) or 

a person described in section 202(a)(17) of the Investment Advisers Act of 1940 

(substituting the entity for the investment adviser referred to in such section).2

2. The platform carve-out should be extended to cover platform providers in the IRA 

and owner-only retirement plan space.

You asked during our meeting whether OppenheimerFunds, as a provider of IRA and “owneronly” small business retirement products, would continue to request an extension of the Proposed 

Rule’s 401(k) platform carve-out to IRA and small business plan platforms if the Department 

were to exclude marketing to financial professionals from the definition of fiduciary advice.3

 

We believe that platform relief is still necessary for business models such as ours even if the 

Department grants a final carve-out for advice provided to financial professionals because (a) 

2 This definition is taken from the definition of “financial adviser” under the ERISA section 408(g) regulation. See

29 C.F.R. § 2550.408g-1(c)(2)(i). 3 OppenheimerFunds offers an IRA product that accounts for a substantial portion of the firm’s retirement assets 

under management. In its line of small business retirement products, OppenheimerFunds also offers a qualified 

401(k) product that is specifically designed for “owner-only” small businesses, called the OppenheimerFunds 

“Single K” product. The vast majority of plans established through this product are technically not covered by 

ERISA because they cover only a business owner and his or her immediate family, and no additional employees. 

See 29 C.F.R. § 2520.3-3(b). The IRA and Single K products offer investors access to the full range of 

Oppenheimer mutual funds as investment alternatives. 

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participants and accountholders may invest in OppenheimerFunds products through a platform 

without the intervention of a financial professional; and (b) the 401(k) platform carve-out creates 

the inference, by negative implication, that the provision of non-401(k) platforms may constitute 

fiduciary advice. 

Investors access the IRA and Single K products by entering an agreement directly between the 

IRA holder/business owner and OppenheimerFunds. Although the agreement runs directly 

between the IRA holder/business owner and OppenheimerFunds, OppenheimerFunds does not 

provide any recommendations of either the product or investments in connection with these 

products. Instead, just as in the mutual fund context, OppenheimerFunds relies on a network of 

third-party financial intermediaries to market its IRA and Single K products to potential 

investors. 

We believe the activities of OppenheimerFunds related to the assembly and offering of the IRA 

and Single K products would not rise to the level of fiduciary “investment advice” under DOL’s 

Proposed Rule. In this regard, subsection (a)(1) of the Proposed Rule requires a person to 

provide one of three types of specific “recommendations,” or a statement of value concerning 

specific securities or property, in order for fiduciary status to be triggered. See DOL Prop. Reg. 

2510.3-21(a)(1)(i)-(iv). 

You advised us that the platform carve-out under subsection (b)(3) was intended to provide 

certainty to 401(k) plan providers and was not intended to suggest that platform activity 

necessarily fit within the basic definition of fiduciary advice, leaving open the possibility that

platform providers’ specific activities may not rise to the level of fiduciary advice under the 

threshold tests set forth in the rule even without reference to the 401(k) platform carve-out. 

However, our concern is that the current text of the carve-out creates a significant negative 

inference for platform providers such as OppenheimerFunds, and could be interpreted as 

triggering fiduciary status regardless of the results of a technical application of subsection (a). 

This is because the introductory text of the carve-out section of the regulation provides:

(b) Carve-outs—investment advice. Except for persons described in paragraph (a)(2)(i) 

of this section [describing persons who explicitly acknowledge ERISA fiduciary status], 

the rendering of advice or other communications in conformance with a carve-out set 

forth in paragraph (b)(1) through (6) of this section shall not cause the person who 

renders the advice to be treated as a fiduciary under paragraph (a) of this section.

See DOL Prop. Reg. 2510.3-21(b) (emphasis added). This language suggests that the carve-outs 

apply to persons that are otherwise providing fiduciary advice under the broad definition set forth 

in paragraph (a)(1). The preamble echoes this framework, making clear that if the terms of a 

carve-out are not met, the activity could be included within the scope of the general definitional 

rules of subsection (a). See 75 Fed. Reg. 21928, 21941 (Apr. 20, 2015) (“Accordingly,

paragraph (b) contains a number of specific carve-outs from the scope of the general 

definition.”). 

Our concern arises because OppenheimerFunds can be said to assemble a “platform” of 

investment choices that are made available to investors through these products by its act of 

limiting the available investments to Oppenheimer mutual funds. But, the so-called “platform”

carve-out provided in the Proposed Rule is expressly limited to persons who make securities or 

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other property available to benefit plans as described in ERISA section 3(3) through a platform 

or other mechanism. See DOL Prop. Reg. 2510.3-21(b)(3). Under its express terms, the carveout is not available to persons who perform the same activities with respect to non-ERISA plans, 

including IRAs and owner-only plans. Thus, given the articulation of the current platform carveout it would be reasonable to infer that platform assembly and sponsorship activities in-and-ofthemselves for non-ERISA plans would be considered fiduciary activities under the initial test 

set forth in subsection (a). 

For these reasons, we ask that DOL extend the platform carve-out so that it applies in the case of 

any “plan” within the meaning of ERISA section 3(3) and section 4975(e)(1) of the Internal 

Revenue Code. This would make clear that the carve-out extends to IRAs and owner-only 

qualified plans. While extending the platform carve-out, we also think it would be helpful for 

DOL to clarify that it is providing the carve-out to create certainty for providers, but further 

acknowledge that activities related to the offering and assembly of a “platform” of investment 

options from which a plan fiduciary, IRA or other investor may select may not involve the 

provision of a “recommendation” as to the advisability of acquiring, holding, disposing or 

exchanging a security such that the investment advice definition is triggered. 

We greatly appreciate the opportunity to provide these comments and work with you as the 

Department develops and finalizes the Proposed Rule. If you have any questions, please feel 

free to contact me at agabinet@ofiglobal.com or 212.323.5062.

Sincerely,

Ari Gabinet

Executive Vice President

and General Counsel

OFI Global Asset Management, Inc.

cc: Judy Mares, Deputy Assistant Secretary

Employee Benefits Security Administration

Karen E. Lloyd, Division of Class Exemptions

Employee Benefits Security Administration

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